Linktone rallies as Shanda awaits

SteveGelsi

NEW YORK (CBS.MW) -- Shares of Linktone rallied as much as 44 percent Tuesday on strong earnings in what may be a positive sign for this week's initial public offering from compatriot Shanda.

Shanda is on deck to price its initial public offering after the bell on Tuesday as the largest IPO of the week with proceeds of up to $300 million.

The gains by Linktone
LTON
mark the first major bright spot for the Chinese firm since its less-than-stellar initial public offering on March 4.

Priced at $14 per share in the face of strong institutional demand, the stock fell in the open market as the fervor for Chinese tech firms started to cool off.

On Tuesday, shares of Linktone closed up $2.81, or 35 percent, to $10.81 after the company reported first-quarter net income of $2.8 million, or 12 cents per share, up from $100,000, or 1 cent per share, last year.

The average analyst estimate as compiled by Thomson First Call was for earnings of 9 cents per share.

The Shanghai-based wireless services provider in China said revenue rose 440 percent to $9.4 million in the latest quarter.

Linktone expects to achieve 20 to 25 percent revenue growth and 20 to 25 percent income growth in the second quarter of 2004.

Sal Morreale, an IPO trader for Cantor Fitzgerald, said Linktone's results bode well for Shanda, an online gaming firm on deck to raise nearly $300 million.

"The Linktone results certainly help," said Morreale. "The Shanda deal should do OK."

Shanda
SNDA
plans to offer 17.3 million American Depositary Shares at an estimated range of $13 to $15 per share with underwriter Goldman Sachs.

Shanda offers a positive bottom line in the form of $28 million in net income on $77 million in revenue last year.

Elsewhere in the IPO market, Atlas America
ATLS, +0.12%
priced 2.3 million shares at $15.50 for its stock market debut on Tuesday.

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